Question live easier. It has changed the way

Question
1

Vodacom and MTN have experienced a huge growth
because cellphones have made peoples live easier. It has changed the way people
communicate and exchange information. The increase in the quantity demand of
cellphones has created a shift in the demand curve from D0 to D1. This is as a
result of an increased quantity demanded from Q0 to Q1.Because of the demand price
of cellphones will also increase from P0 to P1. The
supply curve will also be affected; it will shift outwards from S0 to S1
meaning that the supplier will supply more cellphones to fulfill the demand and
also taking an advantage of the increased price. To avoid the excess supply the
supplier will have to slightly decrease the price, to reach a new equilibrium,
because if the supplier can maintain the same price the quantity demanded will
decrease. The quantity demanded will also be increased when the supply shift
and the price decrease.           

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Questions 2

When sanctions were lifted in SA we were
reintegrated to the world economy and globalisation.We moved from fixed exchange rate to floating
exchange rate – to increase foreign demand for SA exports and enable an inward
flow of capital.Implemented macro-economic policies that were
aimed at promoting domestic competitiveness growth and employment.Government opened doors for foreign investment
and they’ve also developed investors-friendly policies to support the
pronouncementTaxes and tariffs were reduced; fiscal deficit
was brought under control.

Question 3

The
abandonment of the Rim’s blackberry by customers will results in an inward
shift. That means the demand for blackberry will decrease, quantity demanded
will decrease from Q0 to Q1. The supplier will have to get rid of the excess
supply by reducing the price, therefore the price will be reduced from P0 to
P1.Because blackberry’s will be less demanded on the market, the supplier will
have to reduce the supply of the product because they’ll not be making any
profit. This will cause the leftward shift on the supply curve; the supply
curve will shift from S0 to S1.

 

 

 

 

 

The
huge demand for iPhones will cause the demand curve to shift outwards, meaning
more iPhones are being demanded in the market. The quantity demanded will
increase from Q0 to Q1. To get rid of the quantity demand shortage the price
will be increased from P0 to P1. The supplier will supply more of the iPhones
because they’ll be making huge profit margins, this will cause the supply curve
to shift from S0 to S1. The price for iPhones will decrease slightly to get rid
of excess supply.

 

 

 

 

 

 

 

 

Question 4

Given
the social and economic state of our country that was neglected by the
apartheid government, we really have to maintain the two. We need to ask
ourselves which one is more sustainable between social grants and enabling
infrastructure. I believe more financial resources should be allocated on
creating an enabling infrastructure, because that will enable the government to
collect more taxes from the people. In return that will improve our countries
economic growth. Social grants should still be maintained and be allocated to
those who desperately need it, like pensioners, disabled and feeding schemes at
the schools.With
our countries education I’ll definitely invest on a private school education
for my child, because you are guaranteed to have quality education. Most of the
schools that are referred to as private school have good passing rate every
year, and their sporting or extramural activities are always maintained and
kept in good conditions for children to part take in them. Investing in
education is building a good educational foundation for your child, unlike
investing on medical aids like Discovery. Yes, our clinics and hospitals are
currently not in a good condition but there are qualified and respectable
doctors who offer excellent service. With NHI in a pipeline maybe we will have
an improved health service and there won’t be any need for medical aids.

Question 5

Telecommunications
e.g. TelkomDe BeersElectricity
e.g. Eskom

Monopoly
or Oligopoly are profit-maximising companies, they have characteristics of
colluding in order to set their prices way above their cost of production, and
that is the main cause of other companies not being able to compete. An example
of Monopoly would be Eskom, unfortunately it has not been able to set its own
price because it is regulated, but if it wasn’t because of that Eskom would
have taken an advantage that it’s a sole provider of electricity in SA and
manipulate its prices to its own advantage.

Monopolies
and Oligopoly can manipulate the level of completion, by making it impossible
for the small / medium companies to compete in the market. Example: They can
lower their prices because their cost of production is very low, and that will
have a negative effect on the small/medium company resulting in a shut down.

Monopoly’s
output is very low and its prices are very high, and again they fail to pay
sufficient attention to the quality of their products or service to customer.
Example will be state monopolist that leaves consumers with no choice but to accept
poor products and service

Question 6

The
dominant players can inflate the price and as a competitor with an identical
product you can’t compete with the set price, because of consumers responds to
the set price you can be forced to close business because you won’t make profit.

The
dominant players can restrict their suppliers not to do business with their
competitors, and that will disadvantage the smaller businesses.  

Cartelist
actions have negative impact on consumers and the ability of small and medium
companies to enter and grow in this market. Example: Pioneer Food activities
resulted in the price increase of bread by a huge margin, and since bread is a
basic need for most poor consumers they didn’t have a choice but to buy despite
the inflated price.

Cartel
activities doesn’t only destroy the market and consumer it also has a huge
negative impact on our economy. The industry suffers because it doesn’t grow as
it supposed to be growing under competitive environment.

Question 7

According
to the CEO of Daimler AG, C-class is the top seller in its segment, they’ve
seen a 16.8% growth in the past 12 months (401,340 units), compare to E-class
where they’ve seen 4.7% (338,386) growth. It is evident that the C-class is
more in demand compare to an E-class. The variable cost for producing the
E-class are much high than that of a C-class, therefore the total cost for
producing E-class will be more than the total cost for producing the C-class.
Mercedes can leverage on the economies of scale, where they can produce more
C-class on a larger scale with less input cost.

 

 Question
8

Chinese
are very innovative and they have low wages, good technology and undervalued
currency and that gives the Chinese manufactures a huge cost advantage. They
invest in lots of internal market. In exchange for market access, China demands
that foreign business build factories in China using the latest technology and
take on Chinese partners. Therefore SA must invest on building more factories
or markets, and ensure that they invest in the best fit technology to be able
to compete with the likes of China.

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